ECM Weekly (3 November 2018) - TFFIF, Innovent, Softbank, Zhaogang - Open the IPO Floodgate!

It has been a fairly quiet week but with the market bouncing back from last week's low, we are getting more news flow on IPOs looking to launch their books soon and activity is starting to ramp up towards the end of the year.

Starting off in Hong Kong, Innovent Biologics Inc (1801 HK) has finally turned the lackluster IPO space around with a strong debut on the 1st of November, closing 18.5% above its IPO price. Prior to its debut, the institutional excluding cornerstone bookbuild was more than 10x oversubscribed and the IPO was priced at the top-end, suggesting positive sentiment going into the IPO. At current valuation, the upside is limited as it is trading around Ke Yan, CFA, FRM 's base case of US$2.5bn in his update note, Innovent Biologics (信达生物) Post IPO: Hit Our TP, What's Next?

Meanwhile, Thailand Future Fund (TFFIF TB) made a decent debut opening 3% above deal price and continued to trade marginally above its IPO price. There is nothing exciting about the debut since this is effectively a REIT. Furthermore, since the share has been mostly placed to local investors and not marketed for a quick profit but as an investment for a steady income stream, the share price will probably continue to hold up even though Sumeet Singh's view is that TFFIF should at least trade at a 200bps spread over government yield.

In Japan, Softbank Group (9984 JP)'s ambition for a US$90bn IPO for its telecom unit is dented after NTT Docomo Inc (9437 JP) succumbed to pressure to cut prices. The company guided that it will take about five years to recover above the profit level for the current fiscal year which led to KDDI Corp (9433 JP) and Docomo crashing 15 - 17% on the day of the announcement.

For upcoming IPOs, we are seeing a handful of IPOs that will launch soon in Hong Kong and we are already hearing preliminary valuations for them. Wanka Online (1669726D HK) is said to be valued up to U$1.6bn, Mobvista (MBV HK) up to US$3.3bn, Babytree Inc (BABYTRE HK) up to US$4.3bn, and Tongcheng-Elong Holdings Ltd (1629482D CH) up to US$6.8bn.

Sinochem Energy (1644249D HK) should also launch soon since it has passed the Hong Kong listing approval while Idreamsky Technology, which was previously delisted from the US, is seeking listing approval in Hong Kong too. Last, but not least, CNFinance Holdings Ltd (1640496D US), which already had some coverage on Smartkarma, is looking to raise only US$50m, much smaller than its initial guided valuation.